LULU 1M Chart

LULU Active Option Trading Pre-Earnings

$LULU is on my watch-list and they’re coming into earnings (Thursday) and looking at the active options today can give you a good idea for expectations. What strikes me as odd is that the active options today are on the May strikes, not the April strikes.

The most active strikes today are the May 75 calls and May 70 puts. The chart will give you an idea why:

LULU 1M Chart
 The 70/75 Straddle is the strategy of choice.

Are people buying this straddle or selling it? The reward profile looks more interesting to me on the sell side, but I honestly don’t know. If anyone has more info, I’d love to know.

Here’s the risk profile for the May expirations if you’re a seller.

LULU Risk Profile

The IV30 is at 43.63 and the HV30 is at 31.31. The break-even at expiration is between $62.50 and $82.50. This trade on the sell side looks very interesting to me, that’s a 20 point range. In other words you’d be betting that $LULU will stay over 62.50 and under 82.50 for the next 45 days. If you’re a buyer you’re betting it’ll break out of that range.

This is worth watching.